Automobile financing is the process of obtaining a financial loan to purchase a car or other type of vehicle. Automobile financing may apply to the full purchase or leasing of a vehicle.
Automobile financing is often managed through:
- A car dealership;
- An auto finance company; or
- An auto loan finance company that specifically provides car loans separate from a dealership.
Automobile loan laws are the rules that govern automobile financing to help ensure that the customer who is attempting to obtain a loan is not taken advantage of. Automobile financing is available because some individuals cannot afford to purchase a new or used vehicle at one time or cannot afford the initial down and monthly payments.
The process of obtaining an automobile loan involves several steps, including:
- Finding a lender;
- Researching the borrower’s credit background and eligibility;
- Discussing and negotiating the terms of the loan, which include interest rates and monthly payments;
- The approval of the loan amount and the details of repayment of the loan; and
- Dispersal of funds to the borrower.
Once these steps are completed, the individual obtaining the loan can make their automobile purchase. However, if the borrower does not qualify for financing through the dealership or a lender, they may have to repeat some of the steps above.
If an individual has any questions about automobile financing in California, they should consult with a local attorney in California. If they have a dispute involving their financing, they should consult with an attorney to determine if they can file a lawsuit against their car loan company.
What Are Some Common Auto Financing Legal Disputes and Issues?
Automobile financing transactions may be a source of legal disputes or conflicts. Automobile loan laws protect against loan fraud and other issues with borrowers and lenders.
Although automobile finance deals are typically not as major as home or business finance transactions, they may still be sizable in amount. In addition, obtaining an automobile loan is important to many individuals, as the ability to own and drive a vehicle may affect many aspects of their lives, including:
- Work
- Family visits
- Recreation
- Other uses
Examples of common legal issues and disputes that form the basis of an auto financing lawsuit may include, but may not be limited to:
- Loan fraud;
- Other related issues such as auto warranties, especially if the financing is connected with the dealership;
- Borrower defaults on loan payments;
- Issues with debt and loan approval;
- Unfair lending practices;
- Various other related issues.
One of the most common types of disputes in automobile financing lawsuits are disputes over the loan terms, including:
- Loan amounts;
- Payment periods;
- Interest rates;
- Procedures for situations when a borrower fails to pay back the required loan amounts.
What Is Auto Financing Fraud and What Are the Penalties?
Automobile loans may sometimes involve fraud. Fraudulent loans may come in many forms and involve many different types of scams.
For example, automobile loan scammers may pretend to be finance agents and give a borrower invalid forms or fake information to obtain the individual’s personal information. Once the perpetrator has this information, they may use it to accomplish identity fraud or steal from the borrower.
Similar to any type of crime, the legal penalties associated with fraud may be severe and often involve criminal charges or criminal restitution. If the fraud was severe enough, the perpetrator may also face jail time.
If the perpetrator of the fraud was a licensed loan agent, they may also face other consequences, such as the loss of their professional loan license. In certain cases, automobile fraud schemes may be more widespread and may not just be isolated instances.
If this occurs, it can affect consumers and borrowers. If an automobile loan company has fraudulent practices that are built into its policies, an entire business can be penalized. In these types of situations, a class action lawsuit may be filed so that the claims can be consolidated more efficiently.
What Happens if Auto Loan Financing Falls Through?
There may be a chance that an automobile loan is denied. If this occurs, there may be an issue with pre-approved financing or the car dealership may have made a mistake.
If an individual is denied an automobile loan, they should be prepared and know what to do. The easiest option would be to return the vehicle to the dealer, as they likely were requested to do.
One alternative option is the individual can obtain financing on their own. Obtaining a loan from a private lender may also be more favorable to the borrower.
Because an individual will be legally responsible for returning the vehicle, they must ensure they do not ignore the issue. This can lead to the automobile being repossessed as well as the cost of the towing and recovery fees being charged to the customer.
An individual should also ensure not to use violence to repossess the vehicle, as this will lead to further charges and issues that will not help solve the problem.
How Do I File an Auto Financing Lawsuit?
Similar to any lawsuit, an automobile financial lawsuit will require a lot of paperwork and evidence. Because automobile financing is a highly transactional field, there will often be a large volume of documentation in the process.
There are certain forms of evidence that may be used to support an automobile financing claim, such as:
- Loan contracts
- Company or agent certification documents
- Recipes
- Payment receipts
These documents can be used to help settle disputes over the finance contract, especially those having to do with specific terms in the contract. Automobile financing lawsuits usually end with a monetary damages award being issued to the non-violating party in order to compensate the plaintiff for their financial losses.
For example, a borrower may be able to recover damages as well as other costs if they discover they were paying too high of a monthly amount according to the contract. Other consequences may also be applied, such as a requirement that the lending company revise its company policies governing contract terms.
What Is the Statute of Limitations on an Auto Financing Lawsuit?
In the majority of lawsuits, a plaintiff only has a certain amount of time from when an incident occurs to file a lawsuit, called the statute of limitations. In general, the statute of limitations for the majority of consumer debts that arise from written contracts in California is four years.
Do I Need a Lawyer if I’ll Be Filing an Auto Financing Lawsuit?
If you need to file an automobile financing lawsuit or if you have questions about an automobile financing lawsuit you are involved in, you should consult with a California auto loan lawyer. Although it may be possible for you to represent yourself, most people who file these types of lawsuits have the help of a lawyer.
Filing an automobile financing lawsuit can be a complicated legal issue, and your lawyer can decide whether or not it is the right decision for your issue. Your lawyer will address any questions or concerns you may have regarding your legal claim, and, in some cases, a lawyer can get you out of a car loan lawsuit.
